What Obama Really Means When He Says He’s ‘Phasing Out Coal’

Coal leases continue to expand, with millions of tons set to be extracted and sold on the cheap.

Coal leases are alive and well in states like Wyoming and Montana. (Photo: CDIC/ Reuters)

President Obama talks a good game on the need to phase out coal. But his administration continues expanding coal leases in Wyoming and Montana.

Amid growing concerns about the carbon pollution from coal mining, burning and export proposals, last week the Bureau of Land Management scheduled the sale of 167 million tons of publicly-owned coal with the Hay Creek II Lease by Application in the Powder River Basin.

This follows an announcement in July that BLM plans to lease 148 million tons of coal with the Maysdorf II Lease by Application on August 21.

KC Golden, policy director for Climate Solutions, tells TakePart: “The federal government is giving away public coal; it’s literally cheaper than dirt. Using EPAs numbers, the climate damages alone from burning the coal exceed the price paid by King Coal by a factor of 60 or more. By far, the highest value for that public resource is keeping it in the ground.”

Among key findings of the IG report: the BLM is failing to take into account coal exports when selling federal leases, leases are not competitive (there is never more than one bidder for each lease auction), and that for every penny-per-ton coal is undervalued, taxpayers lose $3 million.

Selling publicly-owned coal at rates of around $1 per ton amounts to a major fossil fuel subsidy, favoring coal at the expense of cleaner forms of energy.

Coal companies’ accounting is notoriously hard to unravel, but outsiders’ best guesses have them buying coal for $1 per ton, valuing it at between $10 and $30 per ton, and selling it in China for up to $120 per ton, including shipping costs.

And now that United States electric utilities are moving away from the energy source, Powder River Basin coal is increasingly destined for export to Asian countries; so, increasingly, American taxpayers subsidize, not American electricity consumers, but Chinese businesses.

Between 2011-2012, BLM leased over 2.1 billion tons of coal in the Powder River Basin, unlocking nearly 3.5 billion metric tons of CO2. These and other concerns about the federal coal leasing program were detailed in a letter sent to Interior Secretary Jewell on her first day on the job from the leaders of 21 environmental, health, and consumer organizations.

In July, several organizations again called on Secretary Jewell to fix the flaws in the federal coal management program and to stop selling new coal leases in the meantime. The Inspector General report made 13 recommendations to fix the flaws and find fair market value for the leases (none involving climate), but the recommendations can’t be implemented until next year…and meanwhile, the leases go on.

“By continuing to subsidize the extraction of hundreds of millions of tons of publicly owned coal, the Bureau of Land Management is undermining President Obama’s Climate Action Plan. The Hay Creek II and Maysdorf II coal lease sales would unlock huge amounts of carbon pollution, more than the annual emissions of 100 million cars, despite the President’s insistence that exacerbating the problem of carbon pollution is not in the national interest. Interior Secretary Jewell should cancel these and all upcoming coal lease sales and reform the federal coal leasing program to address concerns that it is fueling climate change, subsidizing coal export proposals, and cheating taxpayers.”

Golden, of Climate Solutions, sums it up: “Leasing-as-usual is a climate disaster and an epic taxpayer ripoff. Secretary Jewell needs to call a timeout on leasing to evaluate this.”